Archive for January, 2010|Monthly archive page

David Matsuda –the President’s pick to serve as Maritime Administrator–is ready to serve.

He returned to familiar turf this week when he appeared at his nomination hearing. He worked for the same committee that will be voting on his nomination. His work in the Senate had to do with railroads, ports, transit, trucking and aviation. He worked for a senator whose state’s second largest employment sector is logistics and which is host to the New York Harbor and Delaware River gateways.

Since mid 2009 David Matsuda has been running the Maritime Administration as the top political appointee at the modal agency. He has the confidence of Transportation Secretary Ray LaHood who first knew him as Deputy Assistant Secretary for Policy.

Importantly for MARAD–and for the marine transportation system–he has knowledge and experience to help shape a new transportation policy for the administration to recommend to Congress. That transportation policy has to include, for the first time, a national freight policy. And by rights it should put the marine transportation system squarely in that policy.

David Matsuda’s prepared statement for the hearing was brief and straightforward. He reminded the committee that the “impacts of our nation’s maritime industry are not limited to coastal states.”

“Items brought in by ship make their way to store shelves and factory lines throughout the nation. Some raw materials we mine, goods we produce, and agricultural products we grow for export leave through our seaports or travel down rivers or across great lakes to distant markets. In all, 36 states have a maritime port—whether it’s on a river, lake, gulf, or ocean. Merchant mariners live in just about every state in the Union, and midshipmen nominated by you and your colleagues to study at the U.S. Merchant Marine Academy can claim home to all but one state. Some states have shipyards or marine manufacturers which can be the largest sources of jobs in an entire community or region.”

He noted acknowledged the challenges.

“Today’s industry is struggling with many tough challenges: a lagging economy, climate change, the threats of invasive species, piracy and other security issues, a greatly expanded Panama Canal opening in 2014, and an aging workforce, to name a few.”

One of the challenges facing the next Administrator is to make something of the marine highway program. It is just getting started. With no assurance of a reliable funding stream for the program, MARAD–hopefully with strong support from the Secretary’s office–will have to make the most of its modest resources to develop a credible and creative program that will be central to MARAD’s mission for many years to come.

“I feel my experience working within the federal government, and especially working in the Senate, has allowed me a broad understanding of how these challenges can be approached successfully: by working with all stakeholders in good faith and with transparency in decision-making.”

The liner shipping industry, through its World Shipping Council, has proposed a regime for improving ocean-going vessel emissions worldwide. It’s a good move. The WSC considered what proposals were already on the table–fuel tax and emissions trading system–and offered something different and credible.

The Vessel Efficiency System (VES) takes a cue from regulatory regimes like American CAFE standards for vehicles. Reduce fuel consumption and increase efficiency to reduce carbon emissions.

An international standard is a must for such a borderless, multinational industry. The industry knows that at least one proposal on the table has in mind using ocean shipping as a revenue source for the broader GHG reduction strategy discussed at COP15 in December. (Simply a tax on bunker also would not address enviro complaints that emission reduction is not directly addressed.) WSC doesn’t want GHG tax revenues raised on ships to stray far and so proposes “that some significant portion of the funds be dedicated” to R&D ‘targeted at increasing the energy efficiency of the world’s fleet.”

Presumably the proposal will have some support among major flag nations. Undoubtedly the proposal will be picked apart in some quarters. But then WSC President Chris Koch and environmental VP Bryan Wood-Thomas know that. Better to have your own proposal in the mix. “The Committee is invited to consider the information in this document and take action as appropriate.”

Below are some excerpts from the VES proposal; the full document is here; a JoC story is here. Pbea

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World Shipping Council – Vessel Efficiency System (VES)

Establish efficiency design standards or targets for new and existing vessels where calculation of an Energy Efficiency Design Index baseline is feasible,

Establish mandatory efficiency standards applicable to new builds, with subsequent standards established through successive tiers,

Establish different (less stringent) efficiency standards that apply to the existing fleet after a given year,

Assess charges on fuel consumption for existing vessels failing to meet the standard for existing vessels, and

Establish a fund populated by the revenue.

The purpose of combining vessel design efficiency with the fund concept is to:

Produce an enhanced environmental result;

Address criticisms that the other proposal to establish a fund through fees on bunker sales would be a commodity tax with limited impact on improving carbon efficiency across the world’s fleet;

Provide greater incentive to vessel operators to invest in efficiency improvement; and

Discourage the long-term operation of the most inefficient vessels.

For those ships subject to the charge…the relative cost per ton is less for those ships that miss the standard by a smaller margin. The least efficient ships of a given class and size would pay the highest charge.

Like the Danish proposal, such a system would generate funds for an IMO administered “fund;” however, this approach would also financially reward those ships that meet the specified efficiency standards and create an incentive to improve or retire the least efficient vessels within a given class and size grouping.

Envy is a perfectly serviceable starting point for developing national transportation policy. Our new high-speed rail program is an apt example. It’s a Euro-inspired, greenish gleam in a candidate’s eye made billion-dollar real by our new president and the stimulus package. While we wait for our first bullet-ride to Disney World or Albany let’s consider what the national transportation policies of other countries are accomplishing. We continue this series with another look to the north and Canada’s North American gateway strategy. This time…investment in short sea.

This item caught the eye.

Government of Canada takes action to facilitate shortsea shipping

OTTAWA — The Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, today announced completion of the Southern Railway of British Columbia (SRY) rail barge ramp, a shortsea shipping project at the marine rail terminal on Annacis Island in Delta. This project was made possible by $4.6 million in federal funding under the Asia-Pacific Gateway and Corridor Initiative. (release: January 15, 2010)

Turns out the Canadian gateway strategy isn’t just attracting international containers to ease them on down to the U.S. by rail. The plans for the Pacific gateway include using the marine highway as an “optimizing” element for goods movement. “Better use of our waterways through shortsea shipping can help alleviate congestion, facilitate trade, reduce greenhouse gas emissions, and increase overall transportation efficiency.”

After a call for proposals five projects were selected for the plan totaling over CN$20 million, to be matched by the private sector grantees:

Fraser River Shuttle;

Deltaport Shortsea Berth;

Vanterm Shortsea Berth;

Mountain View Apex Container Terminal; and

Southern Railway of B.C. Rail Barge Ramp.

These projects in the Vancouver, B.C. region “call for the development of specialized facilities such as docks, ramps, and fixed-crane infrastructure that would facilitate shortsea shipping of a variety of cargos (including containers, railcars, and break-bulk cargos) that ultimately either originate from or are destined for Asia.” (release: September 5, 2008)

This marine highway element of the Asia-Pacific Gateway strategy is designed to increase efficiency and reduce environmental impacts of goods movement. It is intermodal. It ties marine to rail and road. “The Annacis Island marine rail terminal will provide industries in coastal B.C. and Vancouver Island with rail connections to four major railways: Canadian Pacific, Canadian National, Union Pacific and Burlington Northern Santa Fe.” Obviously, an equal opportunity connector.

It may be a fair to say that the above grants planned to boost short sea shipping in Canada’s largest port region are roughly comparable to the marine highway grants program recently authorized by the U.S. Congress. The Canadian grants support pieces of a strategic plan; the U.S. grants will support projects that meet certain market and public benefit criteria and are in designated “corridors.” The Canadian grants support capital requirements, which the U.S. version is likely to do. On the other hand, the above grants go to projects of companies, such as terminal operators. While most marine highway projects in the U.S. are assumed to be private sector initiatives the grants likely would go to sponsoring public agencies.

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One googling leads to another. I’ll close with a video from The Sustainable Region TV program of Vancouver, a place known for its clear skies (and a looming Olympics). Pbea

Jim Kruse and colleagues at the Texas Transportation Institute (TTI) completed a study that identifies obstacles to marine highway development. It’s a good report. At least I can say that the presentation I saw last evening outlined a lot of useful information. The report itself is not yet available.

I can’t wait to read about the failed domestic shipping services that the TTI team examined. (They looked at successes, too.)

Clearly there are obstacles. There are the perceptions. The operational issues. The insufficient demand, particularly during tough economic times. The potential customer expectations…assuming you can him to the point of talking about expectations.

There are the governmental hindrances. The ingrained logistical practices. The costs of multiple handling of cargo. The scarcity of financing for start-ups.

But wait! There is good news. Folks don’t see the Jones Act as much of a problem. (Seriously, that’s in the report.)

Are we surprised there are many of these obstacles? No. A number of them have been well known. Prime Example: the Harbor Maintenance Tax as applied to non-bulk cargo clearly needs to be addressed.

Can we learn from this study. Yes, indeed.

Truth is, we have a lot to learn. A lot to address.

At the TRB Annual Meeting (as if thousands of people can “meet”) some other things caught my attention.

In the foreseeable future trucking will no longer be at a disadvantage when compared to marine transportation emissions on a ton-mile basis.

When this decade the U.S. implements its self imposed Emission Control Area (ECA or “ee-ka”) limiting emissions within two hundred miles of the coastline vessels will have to adopt use of cleaner fuels, which will put vessels at a complete economic disadvantage vis a vis trucking.

Accepting these at face value, marine highway advocates also will have to address some fact of life environmental obstacles. But then we knew that, too.

Marine highway services are operating in the U.S. now. Ten years hence marine highways will be more a part of the national transportation system. How much of a part of the system will depend on how well government and industry transition marine transport to meet commercial and public needs and do so in a changing environment.

The obstacles in front of us are not fortress walls. The obstacles just show us where we need to get to work. Pbea

The Federal Maritime Commission has formed a Maritime Environmental Advisory Committee. This isn’t fresh news–the FMC announced the action last November–but it’s still worth noting.

It is a smart move by Chairman Rick Lidinsky. He announced it, appropriately so, while on a visit to the San Pedro Bay ports. Says the FMC press release: “I wanted to recognize these ports’ leadership in demonstrating that the maritime industry can remain commercially competitive while acting in a manner consistent with the country’s commitment to energy independence and environmental standards.” While those two largest of US ports have led the way in greening seaport operations the Lidinsky comments were a particular reference to the ports’ more recent Clean Trucks Program. It was his way to demonstrate the agency’s new leadership.

The program–in conjunction with the efforts of an enlightened shipper community–has been very successful in reducing port drayage trucking diesel emissions by a praiseworthy 80 percent. Doing it well ahead of schedule. The program has inspired similar action in other parts of the country and, with the exception of one particular element, has the strong support of both public and private interests. (The exception is the controversial “employee driver” provision in the Los Angeles plan that is being challenged by the American Trucking Association in court.)

The formation of the FMC panel followed by several months a decision in the FMC to halt its action against the ports of Los Angeles and Long Beach. Their joint action raised technical issues under the Shipping Act and that prompted an FMC complaint in court as well as the decision to start an FMC enforcement investigation. (The environmental objectives of the clean trucks program were not challenged.) The decision to withdraw the complaint took place before Lidinsky’s arrival at the FMC.

The bid in court proved unproductive. I’ve not the training to judge the merits of the complaint. But I do know that the new chairman–a sharp fellow–knew what he was doing when he asked his staff what was their understanding of the environmental issues that color and confront maritime related activity in the United States today.

On learning the answer Lidinsky took action. A Maritime Environmental Advisory Committee was formed. Strictly an internal panel, the press release notes that the staff committee’s purpose is “consistent” with Obama administration policy for the development of “green jobs”, etc. A reference to creating jobs is de rigueur for a government press release these days, likewise an ethos statement on seeking “a more sustainable approach to maritime issues.”

On a more basic level, however, the new advisory committee would help the commissioners understand what is going on in the maritime realm and tune the agency’s work–its deliberations and services–to what is an undeniably changed environment–regardless of the party in power–in which business and government now has to operate. And smartly so. Pbea